Magnetek lights up over electronic lamp.

Local firm nails exclusive marketing rights to new bulb

Los Angeles-based Magnetek hopes to score touchdowns on marketing a super-efficient light bulb unveiled last week, dubbed the E-Lamp.

The revolutionary light bulb -- which throws off light without using short-lived filament -- already garnered Magnetek volumes of free publicity, drawing the attention of news media across America and a spot on the Good Morning America TV show.

Magnetek, a $1.1 billion-in-sales manufacturer and marketer of electrical equipment announced June 1 it had signed a letter of intent to form a joint venture to market the E-Lamp with high-tech development firm Intersource Technologies of Sunnyvale, Calif.

But the pair now will have to hurdle production and marketing barriers before they can reap benefits from their exclusive distribution agreement for the patented bulb. Only pre-production models were exhibited last week at the Edison Electric Institute meeting in Ohio.

And Magnetek officials predict one more year of work is needed before it is shipped to Magnetek's network of independent distributors' 4,000 sales outlets. These ultimately would be conduits for sales to general consumers -- if and when mass production can bring the price down considerably, sources said.

Some of Magnetek's motors, transformers, control equipment are "energy-engineered" to be extra energy efficient, and this business segment's sales shot up to $300 million in fiscal 1991 from $90 million the prior year.

"We've been pursuing this energy-engineered strategy for three and one-half years, and I think it was finally recognized as a good strategy," Magnetek President and Chief Executive Frank Perna said last week. If currently available energy-efficient lighting, heating and industrial systems were installed nationwide, electric use would be cut by 24 percent to 44 percent, according to company estimates.

Still, some skeptics have wondered if the technical and cost problems are ironed out. The E-Lamp's unit cost is a pricey $10-$20, but could decline with mass production.

Inside the E-Lamp, a signal generated by an electronic circuit in the bulb's base excites a phosphor coating inside the bulb. The glow created can last for 20,000 hours and beam as intensely as that produced by a traditional incandescent bulb, which lasts only about 750 hours before its filament burns out.

Magnetek stock spurted to $16 from $14.25 in the two days following the announcement. But some on Wall Street are cautious.

"I would not expect them to sell that much," opined Robert Cornell, securities analyst with Shearson Lehman Bros. in New York. "The idea that you're going to proliferate a lot of RF (radio frequency) static around the world is not appealing," he said.

Initial markets identified, including museums and stadiums with high ceilings (where bulb-replacement is difficult), make sense, "but there'll be only gradual acceptance of this product," said Cornell.

Officials from the venture companies insisted the E-Lamp is sound.

"The product works, there's no question about that," said Perna, an electrical engineer by training. The patented technology has been around for years, and he said concerns that the electronic signal may create electromagnetic interference with other appliances are unfounded.

Motivating Magnetek's accent on energy-efficient products is federal legislation mandating the use of that sort of electrical equipment. Also contributing are economic incentives to businesses and homeowners, such as rebates offered by utilities for installing energy-efficient equipment and building materials.

Southern California Edison Co., for example, subsidizes the sale of a competing light device, called a compact fluorescent light bulb. Edison pays General Electric Co. and other manufacturers to cut their prices to retailers, so that consumers pay only $3.50-$11.90 a piece, a 65 percent savings Edison officials said.

Edison also has given away more than 1 million energy-efficient bulbs since 1985 and is researching dozens of related gadgets. A 1989 state regulation allows Edison to make money on conservation. This year it is permitted to earn up to 1 percent more profits if it meets conservation goals.